Distributors Must Evolve to Meet Threat of Google, Amazon

Distributors today are at a crossroads, and which direction they take will have serious consequences for their long-term survival. The next few years will be critical for distributors to start adopting Ecommerce and other related digital technologies before their competitors do. That is the message from a recent UnleashWD webinar in which I participated in along with three other distribution industry experts.

The decision to go digital has become more urgent over the past year as the two 500-pound gorillas of the digital world—Amazon and Google—have moved into the distribution market. AmazonSupply.com, in operation since early 2012, is a vast digital catalogue with a shopping cart of more than a million different products, from healthcare, laboratory and office supplies to automotive tools and plumbing equipment. Google began beta testing Google Shopping for Suppliers this past summer. Google Shopping for Suppliers is a search engine for electronic, electrical, mechanical and test/measurement equipment. Suppliers can list their B2B products and corporate purchasing agents can search for and buy the components they need. Clearly, if Amazon and Google are moving into B2B commerce, they see a large market there. Suppliers who fail to provide it risk losing business to online competitors.

Why are these two giants interested in B2B commerce? They see a coming demographic shift that will quickly push a younger generation of digital natives up into procurement and supply chain purchasing roles. The common stereotype of a techno-phobic Baby Boomer purchasing manager is rapidly vanishing as most of them approach, or enterretirement age. The next wave of B2B purchasing agents will be Millennial and Y Generation workers who shop online on their iPads or cell phones and expect to go online for corporate supplies. They will have little patience for suppliers who make online purchasing difficult, and will most likely move to their competitors. This generational shift is happening now and will pick up speed over the next five years as the last of the Baby Boomers retire.

For distributors who grapple with low profit margins, investing even a few thousand dollars into an online catalogue feels risky. They may instead hunker down, cut costs, and try to maintain the status quo. But these distributors are ignoring the fact that, unless they have a very specialized or highly technological averse market, their customers will gradually leave.  

They also ignore the opportunities that Ecommerce offers by putting their brand out on the Internet and attracting customers they never would have had without it. Steve Spitzer, cofounder of Monterey Lighting Solutions, told attendees of the UnleashWD webinar that Ecommerce opened up new regional markets for their products.

"It's removed geographical boundaries for us. We used to serve customers within a 50-mile radius, but with the Internet, we now serve customers all over the country and even internationally," Spitzer said. 

Ecommerce sales can produce a new source of leads as well, Spitzer said. For instance, if someone buys $400 worth of equipment, a quick look at the order will reveal that the buyer works for University of Florida.

"Now we have the ability to reach out to them, thank them for the order, and develop them into a recurring customer," said Spitzer.

The bottom line is that technological innovation is occurring in all industries and radically changing just about every market. For B2B distributors, the time to make the leap into the digital marketplace is now. If they ignore this challenge, their customers will soon ignore them.

-Ranga Bodla, Director, Industry Marketing, Wholesale Distribution and Manufacturing

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